Do We Need a Retirement ‘Check Engine’ Light?

A new survey claims that 401(k) participants are more likely to have someone change the oil in their car than to have someone help them choose their 401(k) investments.

The nationwide survey of 1,000 401(k) plan participants, commissioned by Schwab Retirement Plan Services, found that 87% of respondents were inclined to have someone else change the oil in their car; 51% would get help installing a new faucet; and 36% would look for help with preparing their income taxes — but just under a quarter (24%) would have someone help them choose their 401(k) investments.  

The survey also found that on average, participants spend roughly the same amount of time reviewing and choosing investments for their 401(k) as they do researching cell phone purchases (approximately two hours each) — and they spend more than twice as much time researching their cars before buying than they do evaluating their 401(k) options. On the other hand, they spend even less time (1.9 hours) finding a doctor.

Help ‘Hurdles’  

It’s not as though respondents were comfortable with the process: Roughly a third (34%) admit they feel a lot of stress when it comes to allocating their 401(k) dollars, and more than half (59%) wish it was easier to choose the right 401(k) investments. (Plan sponsor alert: Respondents were split right down the middle as to which was more confusing — their 401(k) investment information or their health benefits information.) 

Access doesn’t appear to be the issue — fewer than a quarter (23%) of those with access to professional 401(k) advice say they have used it. And nearly half (49%) of those who have not used advice believe they would achieve better investment results by getting help.

That is not to say that their 401(k) isn’t important; asked which benefits are “must haves” (aside from health insurance), the vast majority (87%) say a 401(k) is a “must-have” benefit — topping disability insurance (45%), life insurance (42%), extra vacation days (34%) and the ability to telecommute (15%). 

The online survey of U.S. 401(k) participants was conducted by Koski Research for Schwab Retirement Plan Services. It was based on 1,000 interviews (between May 27 and June 4, 2014) and has a 3% margin of error at the 95% confidence level. Survey respondents worked for companies with at least 25 employees, were current contributors to their 401(k) plans and were 25-75 years old.